Call to energy firms as British Gas cuts prices
Consumer groups in the UK today welcomed the first British Gas domestic price cuts in seven years and called on other energy firms to follow suit.
The energy giant will cut its standard tariffs for gas by 17% and electricity by 11% from March 12.
It will bring the average annual dual fuel bill for British Gas customers down by £167 (€251) to £953 (€1,430), the firm said.
It is the first major power supplier to bring down prices in light of falling wholesale gas prices.
Consumer watchdog energywatch said the move was good news for householders.
The watchdog’s director of campaigns Adam Scorer said: “Consumers have been desperate for prices to start dropping and this represents what energywatch believes must be the first strike in a battle by all energy companies to lower prices and fight to attract new customers.”
Rival energy supplier Powergen responded to the British Gas announcement by pledging to cut domestic energy prices in the near future.
Scottish & Southern Energy, which operates brands including Southern Electric, recently told its customers that it expected to cut its prices.
Help the Aged director of communications Steve Jones said the British Gas price cuts were good news for pensioners.
“We are delighted to see British Gas lowering prices. This will be particularly welcomed by vulnerable older customers living on fixed incomes,” he said.
British Gas has increased gas prices on seven occasions since 2002, with electricity tariffs rising six times. It last cut prices in spring 2000.
Its parent company Centrica said the cuts were the result of average wholesale gas prices falling by nearly 50% since last year.
The decrease follows the opening of new gas pipelines into the UK from Norway and the Netherlands, as well as the impact of a previously mild winter.
Centrica said British Gas was now the cheapest gas supplier for the majority of UK energy customers.
Its Scottish arm – called Scottish Gas – will bring in the same gas price reductions plus electricity price cuts of 15%, compared to 11% for other Centrica customers.
Centrica lost around 978,000 domestic customers in the wake of huge increases in energy bills introduced last March and again in September.
Centrica chief executive Sam Laidlaw today defended the firm’s decision not to pass the whole 50% drop in wholesale prices on to customers.
However, he pledged that any further falls this year would be reflected in lower bills.
“We don’t go and buy our gas purely on a day-to-day spot basis – we go out and have to buy our gas on a long-term basis,” he said.
Mr Laidlaw said new undersea pipelines were now delivering additional gas supplies to the UK.
He added: “These new supplies of gas have directly led to the fall in wholesale prices which we can now pass on to our customers. Our price cut still enables British Gas to make a sustainable margin in 2007 and allows for further investments in the future.”
Energy regulator Ofgem said British Gas had fired the first shot in what it expected to be the start of another battle for customers.
Chief executive Alistair Buchanan said more than four million customers swapped energy supplier last year to get better deals.
He said: “The heat is now on British Gas’s rivals who will have to consider how to respond to this price cut.”
Adding: “Today’s announcement means that domestic customers will start to enjoy the benefits of lower prices after a difficult period of high prices.”
Martin Lewis, creator of consumer advice website www.MoneySavingExpert.com advised householders to see how other energy firms responded to the British Gas announcement before switching supplier.
“The best thing to do is hold off then switch and save in a month or so,” he advised.
Karen Darby, chief executive of price comparison company SimplySwitch.com, welcomed the British Gas announcement.
“It is a step in the right direction and will help the many families who struggle to pay their energy bills,” she said.
“However, as its energy prices have rocketed by 86% for gas and 76% for electricity since January 2004, British Gas still has some way to go.”
Amicus national officer Dougie Rooney said: “We now want the other energy suppliers to follow suit. Lower energy prices will ease inflation, help consumers, particularly the less well off and support British industry.”
